News - Malta Maritime Law Association

MMLA President at UNCITRAL Working Group VI first meeting held in New York on the International Recognition of Judicial Sales

May 31, 2019 Leave a Comment

Between the 13^th and 17^th of May 2019, President of the MMLA, Dr Ann Fenech was at the first meeting of UNCITRAL Working Group VI which has been tasked with considering the draft convention presented by CMI on the International Recognition of Judicial Sale of Ships.

Dr. Fenech participated in this meeting at UNCITRAL in her capacity of Vice President of CMI and as CMI co-ordinator for the project at UNICTRAL.

This was the first meeting of the Working Group VI attended by States members of UNICTRAL during which Dr. Beata Czerwenka was appointed Chairman of Working Group VI.

During this first meeting lasting an entire week, the Swiss Delegate Prof. Alex von Zeigler, a member of the Executive Council of CMI, presented the project since it was on the proposal of Switzerland last July 2018 that the 51 Assembly of UNICTRAL accepted to take on this work as part of its programme.

As CMI co-ordinator for the project Dr. Fenech was tasked with giving a preliminary explanation of each proposed article to the convention. There was agreement on the usefulness of the CMI draft to be used as the basis for any future work. The entire week was taken up with the explanations and answering of questions raised by all the delegations present. It was concluded at this first meeting that the UNCITRAL secretariat will now work on another draft taking into account the various ideas expressed and that the next draft will be the subject matter of the next Working Group VI meeting in Vienna in November of this year.

Dr Ann Fenech elected CMI Vice President

December 5, 2018 2 Comments

The Malta Maritime Law Association is delighted to announce that Dr Ann Fenech, President of the Malta Maritime Law Association and Managing Partner of Fenech & Fenech Advocates was last Friday (9 November 2018) elected Vice President of the Comité Maritime International (CMI) by the General Assembly of the CMI at the IMO in London.

The CMI is an international body established in Antwerp in 1891 with the aim of unifying International Maritime Law. It has been responsible of drafting some of the most important international maritime conventions including the Arrest Conventions of 1952 and 1999, the Collision Regulations and the Salvage Convention.

Dr Fenech was suggested for nomination for this position by Ireland and Sweden. She was voted in by the members of CMI who are the national maritime law associations of 51 different countries. She is the first Maltese to be elected to the position of Vice President within the CMI.

The CMI is currently working on a number of important projects including Automation and the International Recognition of Judicial Sales. Dr Fenech was heavily involved in recent efforts in persuading UNCITRAL (the United Nations Committee on International Trade Law) to accept the proposal of the Government of Switzerland to commence work on an International Convention on the International Recognition of Judicial Sales. UNICITRAL has in fact added this project to its working agenda.

Dr Fenech’s election as Vice President of the CMI is considered as a very valuable addition to the profile of Maritime Malta world wide. It will mean that Maritime Malta will also be represented at the highest levels of international maritime law. Ann Fenech has been practicing maritime law exclusively since 1986.

Future of ship recycling in the European Union

December 4, 2018 Leave a Comment

The EU Regulation on Ship Recycling (1257/2013) – which, with respect to new vessels, will enter into full effect on 31 December 2018 – obliges EU-flagged vessels to conduct dismantling operations in European Commission-approved ship-recycling facilities in accordance with:

the Ship-Specific Ship-Recycling Plan (SSSRP); and
the Inventory of Hazardous Materials.

Before any recycling of the ship, the SSSRP is set to be developed by the operator of the ship-recycling facility in accordance with the provisions of the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships 2009.

Ship owners must furnish all ship-relevant information necessary for the development of the SSSRP, including the Inventory of Hazardous Materials which identifies harmful materials contained in the structure or equipment of the ship, their location and approximate quantities. Each new ship must have such inventory onboard to comply with all relevant International Maritime Organisation Guidelines and provide evidence that the ship complies with the restrictions or prohibitions of hazardous materials.

Surveys
Pursuant to the EU Regulation on Ship Recycling, ships will be subject to several surveys undertaken by a recognised organisation and conducted as follows:

initial survey;
renewal survey;
additional survey; and
final survey.

An inventory certificate (supplemented by the Inventory of Hazardous Materials) will be issued following the successful completion of either the initial or renewal survey. The initial survey of a new ship will be conducted before the ship is put into service, while for existing ships the initial survey will be conducted by 31 December 2020. The surveys will verify that the ship-recycling plan and Inventory of Hazardous Materials complies with the regulation.

When a ship is to be taken out of service or recycled, a final survey will be conducted. Following the successful completion of the final survey, a ready-forrecycling certificate will be issued by the appointed recognised organisation. The certificate will be supplemented by the Inventory of Hazardous Materials and the SSSRP.

If the particulars and condition of the ship are not adequately reflected in the inventory certificate, the operator of the ship-recycling facility may decline to accept the ship for recycling. Further, owners of end-of-life ships destined for recycling are required to minimise the amount of cargo and shipg-enerated waste remaining onboard.

Ships flying third-country flags
The regulation also provides for ships flying the flag of a third country calling at a port or anchorage of a member state. It requires such ships to have onboard an Inventory of Hazardous Materials in compliance with the regulation in the same manner as a member state-flagged ship. Following arrival in a member state, a statement of compliance together with the inventory is to be submitted to the authorities on request and may be detained, dismissed or excluded from ports in the event that it fails to submit the same on request by port authorities.

Comment
Pursuant to the above measures, the regulation aims to mitigate and eventually eliminate the adverse effects of operating, maintaining and recycling EU-flagged ships on human health and the environment.

by Lara Saguna Axiaq and Peter Grima, members of the MMLA and maritime lawyers within the Ship Registration & Finance Department of Fenech & Fenech Advocates

Source: ILO

Mortgage amendments – when are they required?

November 21, 2018 Leave a Comment

A mortgage over a Malta-flagged vessel may be drawn up to secure the payment of a principal sum and interest, an account current (ie, an indebtedness arising and determinable in accordance with an underlying obligation) or the performance of any other obligation – including a future obligation – due to a creditor by the debtor.

Shipowners may register a mortgage to secure not only their obligations, but also those of a third party. Notably, the shipowners’ obligation to register a mortgage must always arise from an underlying obligation reflected in an underlying security document. The mortgage narrative must refer to the underlying security document and specifically refer to the obligation which is secured by the mortgage.

The parties to an underlying security document may enter into negotiations resulting in changes to the terms set out in the security document. The question that therefore arises is whether a mortgage amendment should be registered to reflect the new terms.

When should mortgage amendments be registered?

The Merchant Shipping Act (Cap 234 of the Laws of Malta), as amended, gives clear guidance as to when a mortgage amendment must be registered. The act sets out that while a mortgage amendment may be effected for any purpose, the registration of such amendment is mandatory if it aims to:

• increase the amount secured by the mortgage; or
• extend the mortgage to secure, whether as principal or surety, another obligation of the mortgagor to any other person, in favour of the mortgagee.
Where an amendment increases the amount secured by the mortgage, the law clarifies that certain agreements are not considered “an increase in the amount secured by the mortgage” – in particular, agreements to amend or vary:
• the rates of interest payable;
• the modalities for calculating interest, including any indices, margins or market mechanisms;
• the repayment schedule; or
• the currency in which payment is to be made.

In other words, loan restructurings do not warrant the execution and registration of a mortgage amendment.

Alternatively, in cases where the amendment aims to extend the mortgage to secure another obligation of the mortgagor, the law provides that where a new obligation qualifies as a ‘future obligation’ of the mortgagor secured by the mortgage, such amendment need not be executed and registered if the new obligation falls within the maximum sum by way of principal as stated in the mortgage deed.

While registration of a mortgage amendment in the cases above is specifically required by law, an amendment for any other reason remains optional and at the discretion of the parties. However, an amendment may not be registered after the obligation secured by the registered mortgage has been satisfied.

A mortgage deed can be amended by the mortgagor as long as the mortgagee’s written consent is included in the amendment deed; this consent must be attested by a witness. Further, if other mortgages are already registered over the vessel, the amendment may be registered if all of the registered mortgagees whose interests may be prejudiced by the said amendment provide their written consent to the registrar of ships.

Once an amendment has been registered, this forms an integral part of the original mortgage and the priority of the original mortgage is not affected.

by Lara Saguna Axiaq, member of the MMLA and maritime lawyer within the Ship Registration & Finance Department of Fenech & Fenech Advocates

Source: ILO

Lost mortgage instruments

November 8, 2018 Leave a Comment

The registration of a mortgage over a Malta-flagged vessel in favour of an individual, corporate lender or security trustee (the mortgagee) requires the filing of a statutory mortgage instrument (the deed) at the Maltese Ship Registry. Once the mortgage has been registered and the time and date of registration has been recorded in the vessel’s register and annotated on the deed, the registered deed is released in its original form to the mortgagee and certified true copies thereof are released to the registered shipowner (the mortgagor).

Maltese law also permits the transfer or assignment of registered mortgages pursuant to Sections 44 and 44A of the Merchant Shipping Act (Cap 234 of the Laws of Malta), which require the completion of an instrument of transfer or assignment. Once the same has been filed with the Registry of Ships, the mortgage may be transferred in favour of a new mortgagee.

Once the underlying obligation has been extinguished, the mortgage securing such obligation must also be discharged. The discharge of the security will require the filing of the original deed with the Ship Registry and a duly completed instrument of transfer or assignment. Thereafter, following the mortgagee’s instructions, the mortgage will be discharged with the time and date of discharge being recorded in the vessel’s register and on the deed.

However, what happens if the original mortgage instrument is misplaced?

Maltese law affords two remedies in instances where the original deed has been lost. The chosen remedy will depend on the remaining duration of the registered security.

Available remedies for lost deeds

Reconstitution of lost mortgage instrument
Section 48 of the Merchant Shipping Act provides that a lost mortgage instrument can be reconstituted on the mortgagee’s request alone or together with the mortgagor.

A sworn declaration (affidavit) referencing the loss of the original deed, together with a copy of the lost deed, must be filed at the Ship Registry.

The registrar will then make a note in the vessel’s register that a reconstituted mortgage instrument has been issued and annotate the copy of the lost deed.

The annotated copy of the lost deed will be deemed to be the reconstituted mortgage instrument and, should the security registered over the vessel eventually be transferred or discharged, the reconstituted mortgage instrument must be completed overleaf and filed at the Ship Registry. The transfer or discharge will be registered pursuant to the reconstituted mortgage deed.

Sworn declaration
If a deed is lost shortly before the security is scheduled to be transferred or discharged, the mortgagee may issue a sworn declaration (affidavit) indicating that it is the holder of the mortgage and that the original instrument has been lost.

On filing the sworn declaration, the registrar will treat such sworn declaration as the mortgage instrument.

Any mortgage transfers or discharges will be registered by virtue of the sworn declaration; a note to that effect will be entered in the vessel’s register and the sworn declaration will be annotated accordingly.

Comment

The above mechanisms afford mortgagees added protection should their original deed be lost. They not only confirm the continued validity of the mortgage despite the loss of the original deed, but also provide mortgagees with peace of mind and remedies should their mortgage need to be transferred or discharged.

by Lara Saguna Axiaq and Charlotte Spiteri, members of the MMLA and maritime lawyers within the Ship Registration & Finance Department of Fenech & Fenech Advocates

Source: ILO

Member of the Comité Maritime International

MMLA President at UNCITRAL Working Group VI first meeting held in New York on the International Recognition of Judicial Sales

Dr Ann Fenech elected CMI Vice President

Future of ship recycling in the European Union

Mortgage amendments – when are they required?

Lost mortgage instruments

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